Netflix Inc acquired two million more subscribers than Wall Street expected in the final three months of 2017, tripling profits at the online video service that is burning money on new programming to dominate internet television around the world.
The results drove Netflix’s market value more than $100 billion for the first time. Shares jumped nine percent to over $248 in after-hours trading on Monday after rallying throughout the month and rising 53 percent in 2017.
The company has signed up more than half of all US broadband households and is building its customer base in 190 countries by spending billions on programming.
Netflix picked up 6.36 million subscribers in international markets from October through December, when it released new seasons of critically acclaimed shows Stranger Things and The Crown as well as Will Smith action movie Bright. That topped Wall Street expectations of 5.1 million, according to FactSet.
Along with 1.98 million customer additions in the United States, the company ended the year with 117.58 million streaming subscribers around the globe, despite a price hike in October.
Netflix turned a DVD-by-mail business into an online competitor of movie channel HBO. As it grew, it began licensing its own original shows to ensure a stream of new offerings if studio suppliers ended deals.
In fact, Walt Disney Co is making a major push into online streaming and will pull its first-run shows and movies from Netflix in 2019 as Hollywood fights for audiences.
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Netflix plans to spend up to $8 billion in 2018 on TV shows and movies to fend off Disney, Amazon.com Inc, studios-owned Hulu and local competitors that are jumping into online video, and it is turning more and more to high-budget projects, such as the roughly $90 million Bright.
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In 2017, Netflix recorded its first full-year profit in international markets. The company has said it is aiming for steady improvements in profitability overseas in 2017.
Netflix is raising its marketing budget faster than revenue is growing and will spend about $2 billion in 2018. The company expects negative cash flow in 2018 of $3 billion to $4 billion, up from $2 billion in 2017.
Last October, Netflix raised prices for two of its three main subscription plans to help fund the substantial content investment. The earnings report showed customers took it in stride. Revenue for the three months totaled $3.286 billion, in line with forecasts.
Looking ahead, Netflix forecast streaming customer additions of 6.35 million for the first quarter, above analysts' expectation of 5.01 million, according to FactSet.
Investors appear confident in Netflix's ability to grow. Netflix recently traded at 91 times expected earnings for the next 12 months, versus Amazon at 152 times earnings and Disney at 17 times earnings, according to Thomson Reuters data.
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